STOCKHOLDERS AGREEMENT
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS............................................................1
Section 1.1 Certain Defined Terms......................................1
ARTICLE II
BOARD OF DIRECTORS AND OFFICERS........................................4
Section 2.1 Board of Directors.........................................4
Section 2.2 Officers...................................................4
Section 2.3 Operating Committee........................................4
ARTICLE III
RESTRICTIONS ON TRANSFERS OF STOCK.....................................4
Section 3.1 Restrictions on Transfer...................................4
Section 3.2 Offer......................................................4
Section 3.3 Option to Non-Selling Initial Stockholders.................4
Section 3.4 Delivery after Exercise....................................5
Section 3.5 Right to Transfer..........................................5
Section 3.6 Certain Transfers..........................................5
ARTICLE IV
SUPERMAJORITY PROVISIONS...............................................6
Section 4.1 Sale of Stock..............................................6
Section 4.2 Mergers; Dissolution.......................................6
Section 4.3 Acquisitions; Creation of Subsidiaries.....................6
Section 4.4 Transactions With Affiliates or Subsidiaries...............6
Section 4.5 Dividends and Redemptions..................................6
Section 4.6 Loans and Investments......................................7
Section 4.7 Certificate of Incorporation, Bylaws, Stock Agreements.....7
Section 4.8 Material Agreements........................................7
Section 4.9 Business Conducted.........................................7
Section 4.10 Indebtedness..............................................7
Section 4.11 Restrictions on Fundamental Changes; Asset Sales..........7
Section 4.12 Capital Stock of Subsidiaries.............................7
Section 4.13 Subordinated Notes and Senior Loan........................7
Section 4.14 Contracts.................................................7
Section 4.15 Accounting Policies.......................................8
ARTICLE V
OTHER ARRANGEMENTS.....................................................8
Section 5.1 Additional Capital for Cure Event Purposes.................8
Section 5.2 Pre-emptive Rights.........................................8
Section 5.3 Irrevocable Proxy..........................................9
Section 5.4 Access to Information......................................9
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ARTICLE VI
MISCELLANEOUS..........................................................9
Section 6.1 Legend. ..................................................9
Section 6.2 Notices...................................................10
Section 6.3 Severability. ...........................................12
Section 6.4 Entire Agreement..........................................12
Section 6.5 Amendment and Waiver......................................12
Section 6.6 Consent to Specific Performance...........................12
Section 6.7 Assignment; Responsibility for Affiliates.................13
Section 6.8 Variations in Pronouns....................................13
Section 6.9 Term......................................................13
Section 6.10 Governing Law............................................13
Section 6.11 Further Assurances.......................................13
Section 6.12 Headings.................................................13
Section 6.13 Counterparts.............................................13
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STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is made and dated this 9th day
of October, 1997 by and among Genesis ElderCare Corp.(formerly known as Waltz
Corp.), a Delaware corporation ("Corporation"), The Cypress Group L.L.C., a
Delaware limited liability company ("Cypress"), TPG Partners II, L.P., a
Delaware limited partnership ("TPG"), Genesis Health Ventures, Inc. a
Pennsylvania corporation ("Genesis"), and Nazem, Inc., a Delaware corporation
("Nazem"). Cypress, TPG and Genesis, and/or, to the extent applicable, their
Affiliates owning Common Stock (as defined below) are sometimes referred to
individually as an "Initial Stockholder" and collectively as the "Initial
Stockholders," and the Initial Stockholders and affiliates of Nazem owning
Common Stock are sometimes referred to individually as a "Stockholder" and
collectively as the "Stockholders."
WITNESSETH
Cypress, TPG, Genesis and Nazem have agreed to acquire or cause their
Affiliates (as defined below) to acquire shares of Common Stock, par value $.01
per share (the "Common Stock"), of Corporation, which Common Stock shall, upon
the issuance thereof, constitute all of the issued and outstanding capital stock
of Corporation.
Pursuant to the Agreement and Plan of Merger, dated as of June 16, 1997
(the "Merger Agreement"), by and among Corporation, Genesis ElderCare
Acquisition Corp. (formerly known as Waltz Acquisition Corp.), a Delaware
corporation, and a wholly owned subsidiary of Corporation ("Acquisition Corp."),
Genesis and The Multicare Companies, Inc., a Delaware corporation ("Multicare"),
Acquisition Corp. shall be merged with and into Multicare, following which
Multicare shall be the surviving corporation and a wholly owned subsidiary of
Corporation (the "Merger").
The parties desire to enter into an agreement which imposes certain
restrictions and obligations on themselves and/or their Affiliates, as
applicable, and on the shares of capital stock of Corporation in order to
promote their mutual interests.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the following meanings:
"Affiliate" of any Person means any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person.
"Asset Sale" means the sale, transfer or other disposition by Corporation
to any Person or by any Subsidiary of Corporation to any Person of (a) any of
the existing or future capital stock of, or partnership or other equity interest
in, any Subsidiary of Corporation or (b) any other Property of
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Corporation or any of its Subsidiaries, now owned or hereafter acquired, of any
nature whatsoever in any transaction or series of related transactions
(including any or all assets and business of any division or line of business
and further including intangible assets), excluding sales, transfers or other
dispositions of inventory or other Property in the ordinary course of business
of Corporation or any of its Subsidiaries or the trade-in or replacement of
assets in the ordinary course of business of Corporation or any of its
Subsidiaries.
"Board of Directors" means the Board of Directors of Corporation.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the City of New York are required or permitted by law
to close.
"Closing Date" means the date on which the Merger pursuant to the Merger
Agreement occurs.
"GAAP" means generally accepted accounting principles under United States
accounting rules and regulations, consistently applied.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) the deferred purchase price
of assets or services which in accordance with GAAP would be shown as a
liability on the balance sheet of such Person, (c) the face amount of all
letters of credit issued for the account of such Person and all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any lien on any
Property owned by such first Person, whether or not such Indebtedness has been
assumed by such first Person, (e) all capitalized lease obligations of such
Person, (f) all obligations of such Person to pay a specified purchase price for
goods or services whether or not delivered or accepted, i.e., take-or-pay and
similar obligations, (g) all obligations of such Person under interest rate
agreements, (h) all contingent obligations of such Person required to be
reflected on such Person's balance sheet prepared in accordance with GAAP, (i)
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (j) all obligations of such Person upon which interest
charges are customarily paid and (k) current obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of such Person or any warrants, rights or options to acquire such capital
stock (with redeemable preferred stock being valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends); provided, however, that Indebtedness shall not include trade
payables, accrued expenses, accrued dividends, deferred compensation and accrued
income taxes, in each case arising in the ordinary course of business.
"Investments" means (i) any direct or indirect purchase or other
acquisition of any share of capital stock, evidence of Indebtedness or other
security issued by any other Person (including, without limitation, any interest
in any partnership or joint venture), (ii) any loan, advance (other than
advances to employees for travel expenses, drawing accounts and similar
expenditures extended in the ordinary course and consistent with past practice)
or extension of credit (other than accounts receivable created in the ordinary
course) to, or contribution to the capital of, any other Person, including any
guarantee of Indebtedness of any other Person and (iii) any capital contribution
to any other Person; and any of the foregoing shall be considered an Investment
whether such investment
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is acquired by purchase, exchange, issuance of stock or other securities,
merger, reorganization or any other method.
"Management Agreement" means the Management Agreement dated October 9,
1997 by and between Genesis ElderCare Network Services, Inc. and Corporation.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or other entity or a
country or government or any agency or political subdivision or instrumentality
thereof or of such subdivision.
"Property" means any existing or future interest in any existing or future
property or asset of any kind or nature, whether real, personal or mixed, or
tangible or intangible, now owned or hereafter acquired or created (including
without limitation the capital stock of any Subsidiary).
"Put/Call Agreement" means the "Put/Call Agreement dated October 9, 1997
by and among the Stockholders.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Loan" means, collectively, all obligations of the Corporation,
Acquisition Corp. or any of their respective affiliates or co-borrowers under or
in respect of any or all of (in each case, as amended, modified, restated or
supplemented) (1) the Credit Agreement, dated as of October 9, 1997, by and
among Acquisition Corp., as Borrower, the financial institutions identified
therein as Lenders, Mellon Bank, N.A., as Administrative Agent, and the other
Agents identified therein, (2) the Credit Agreement, dated as of October 9,
1997, by and among The Multicare Companies, Inc. and certain of its direct and
indirect Subsidiaries, as Borrowers, the financial institutions identified
therein as Lenders, Mellon Bank, N.A., as Administrative Agent, Citicorp U.S.A.,
Inc. and NationsBank, N.A., each as a Syndication Agent, and First Union
National Bank, as Documentation Agent; (3) the Credit Agreement, dated as of
October 9, 1997, by and among The Multicare Companies, Inc., certain
Subsidiaries of Multicare, the Lenders referred to therein, Mellon Bank, N.A. as
Issuer of Letters of Credit, Mellon Bank, N.A. as Administrative Agent,
Citibank, N.A. as Syndication Agent, First Union National Bank as Documentation
Agent and Nationsbank N.A. as Syndication Agent; or (4) any other loan or other
agreement in respect of indebtedness issued to replace any of the foregoing.
"Stock" means all shares of all classes of the capital stock of
Corporation now or hereafter owned or held by the Stockholders or any other
Person including, without limitation, the Common Stock.
"Subsidiary" means with respect to any Person at any time, (a) any
corporation more than fifty (50%) percent of whose voting stock is legally and
beneficially owned by such Person or owned by a corporation more than fifty
(50%) percent of whose voting stock is legally and beneficially owned by such
Person; (b) any trust of which a majority of the beneficial interest is at such
time owned directly or indirectly, beneficially or of record, by such Person or
one or more Subsidiaries of such Person; and (c) any partnership, joint venture
or other entity of which ownership interests
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having ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are at such time owned directly or
indirectly, beneficially or of record, by, or which is otherwise controlled
directly, indirectly or through one or more intermediaries by, such Person or
one or more Subsidiaries of such Person.
"Subordinated Notes" means the 9% Senior Subordinated Notes due 2007
issued pursuant to the Indenture dated August 11, 1997 by and between
Acquisition Corp., PNC Bank, National Association, as trustee, and Banque
Internationale a Luxembourg S.A., as paying agent.
"Transfer" means to sell, give, transfer, assign, pledge, hypothecate or
otherwise dispose of all or a portion of an interest (legal or equitable) by any
means, direct or indirect, absolute or conditional, voluntary or involuntary,
including, but not limited to, by court order, operation of law, settlement,
exchange, waiver, abandonment, gift, alienation, bequest or disposal, or to
contract or agree to do any of the foregoing.
ARTICLE II
BOARD OF DIRECTORS AND OFFICERS
Section 2.1 Board of Directors. The Board of Directors shall consist of
nine directors. During the term of this Agreement, the Stockholders shall vote
all of their Stock so as always to elect and maintain as directors three persons
nominated by Cypress, three persons nominated by TPG and three persons nominated
by Genesis. In the event of any vacancy on the Board of Directors, the
Stockholders shall vote all of the shares of their Stock for the person
nominated by the Initial Stockholder who was entitled to nominate the director
for whom the vacancy exists.
Section 2.2 Officers. The officers of Corporation shall consist of a
President and Chief Executive Officer, two Vice Presidents, a Treasurer and a
Secretary and such other officers as the President of Corporation may from time
to time establish. The Stockholders agree to adopt, and not change during the
term of this Agreement, an amendment to Corporation's Bylaws providing that
during the term of this Agreement and so long as the Management Agreement is in
effect, one person nominated by Cypress and one person nominated by TPG shall be
elected as such Vice Presidents of the Corporation and such persons nominated by
Genesis shall be elected as all such other officers of Corporation.
Section 2.3 Operating Committee. The Stockholders agree to adopt an
amendment to Corporation's Bylaws providing that the Board of Directors shall
maintain an Operating Committee of the Board of Directors which shall at all
times consist of one nominee of each of Cypress, TPG and Genesis and which shall
perform the functions contemplated by the Management Agreement.
ARTICLE III
RESTRICTIONS ON TRANSFERS OF STOCK
Section 3.1 Restrictions on Transfer. No Stockholder may Transfer Stock
except as provided in the Put/Call Agreement and except a Stockholder may sell
its Stock in strict accordance with the terms and conditions of this Article
III. Any Transfer of Stock in violation of this
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Agreement shall be void ab initio. No Stockholder may do indirectly, through a
sale of its Stock or other equity interest or otherwise, that which is not
permitted by this Section 3.1.
Section 3.2 Offer. If a Stockholder ("Selling Stockholder") determines to
sell all or any part of its Stock ("Offered Stock"), the Selling Stockholder
must first offer (the "Offer") to sell the Offered Stock to the other Initial
Stockholders ("Non-Selling Initial Stockholders"), in accordance with Section
3.3 herein, by giving written notice ("Notice") to Corporation and the
Non-Selling Initial Stockholders setting forth the proposed terms of such sale
(the "Offer Terms").
Section 3.3 Option to Non-Selling Initial Stockholders. The Non-Selling
Initial Stockholders shall have the option to purchase all, or any part, of the
Offered Stock on the Offer Terms and may exercise their options by giving
written notice of exercise to the Selling Stockholder and the other Non-Selling
Initial Stockholders, within thirty (30) days after the date of the Notice of
the Offer. The notice given by each Non-Selling Initial Stockholder shall state
the maximum number of shares of the Offered Stock which it is willing to
purchase. Each Non-Selling Initial Stockholder shall have the option to purchase
that proportion, rounded to the nearest whole number to eliminate fractional
shares, of the Offered Stock which the number of shares of Stock held by such
Non-Selling Initial Stockholder bears to the number of shares of Stock then held
by all Non-Selling Initial Stockholders; provided however that if Nazem is the
Selling Stockholder, Cypress and TPG shall initially have the right, pro rata as
provided above, to acquire the Offered Stock pursuant to this Section 3.3 and
Genesis will have the right to purchase such Offered Stock not purchased by
Cypress or TPG. If a Non-Selling Initial Stockholder does not exercise its
option to purchase its full proportionate share of the Offered Stock, the
Non-Selling Initial Stockholders who have exercised their options may purchase
the Stock not purchased by such Non-Selling Initial Stockholder in such
proportions as they shall agree upon or, failing such agreement, pro rata as
provided above, by giving written notice of the exercise of their options to the
Selling Stockholder within forty (40) days after the date of the Notice of the
Offer.
Section 3.4 Delivery after Exercise. If the Non-Selling Initial
Stockholders shall have exercised their options to purchase all or any part of
the Offered Stock, closing on the sale of such Offered Stock shall occur, and
all certificates for such Offered Stock (or, if such Offered Stock is subject to
pledge, hypothecation or other encumbrance, evidence of the Selling
Stockholder's rights therein) shall be delivered to the purchaser(s) thereof,
duly endorsed for transfer, at the earlier of fifty (50) days after the date of
the Notice of the Offer or ten (10) days after the exercise of the option to
purchase the Offered Stock (the "Transfer Date") at the then principal office of
Corporation.
Section 3.5 Right to Transfer. If all the Offered Stock is not purchased,
the Selling Stockholder may, for a period of forty-five (45) days following the
final date for acceptance under Section 3.4 herein, enter into a binding
agreement (subject to customary conditions) to sell any balance of the Offered
Stock to a third party ("Third Party Purchaser"); provided, however, that (a)
the proposed sale to the Third Party Purchaser must be unanimously approved by
the Non-Selling Initial Stockholders prior to any offer of the Offered Stock to
a Third Party Purchaser, (b) such Stock is sold to the Third Party Purchaser
upon terms not more favorable to the Third Party Purchaser than the Offer Terms
and (c) the Third Party Purchaser agrees in writing to assume performance of and
to be bound by the terms and conditions of this Agreement as a Stockholder
hereunder and agrees to be bound by the Selling Stockholder's obligations under
the Put/Call Agreement. If the Selling
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Stockholder wishes to sell its Stock on other than the Offer Terms or has not
sold such Stock on the Offer Terms within that thirty (30) day period, it shall
be obligated to make new offers and re-offers to the Non-Selling Initial
Stockholders, in accordance with subsections 3.3 and 3.4 herein, and to comply
with the provisions of this Section 3.6, before it shall be permitted to offer
to Transfer its Stock, or any part thereof, to any Person.
Section 3.6 Certain Transfers. Notwithstanding any provision of this
Agreement to the contrary: (a) an Initial Stockholder may at any time and from
time to time Transfer all or a portion of its Stock to an Affiliate of such
Initial Stockholder if such Affiliate agrees in writing to assume performance of
and be bound by the terms and conditions of this Agreement and the Put/Call
Agreement to the same extent as the Transferor hereunder and thereunder; (b) TPG
and Cypress (or their Affiliates owning Common Stock) may Transfer Stock to the
other (or Affiliates of the other) if the transferee agrees in writing to assume
performance of and be bound by the terms and conditions of this Agreement and
the Put/Call Agreement to the same extent as the transferor; (c) the limited
partners of TPG and Cypress (or their Affiliates owning Common Stock) may
transfer their limited partnership interests in TPG and Cypress (or their
Affiliates owning Common Stock); (d) Stockholders may Transfer Common Stock as
contemplated by Sections 6.9 and 8.9 of the Put/Call Agreement; (e) the parties
hereto consent to the pledge existing on the date hereof by the limited partner
of the Affiliate of Nazem owning Common Stock of its limited partnership
interest in such Affiliate and agree that such limited partner may transfer such
limited partnership interest to such pledgee or any assignee of such pledgee;
and (f) except as provided in Section 3.5 or this Section 3.6, no Stockholder
may Transfer Stock to another Person without the prior approval of the other
Initial Stockholders.
Section 3.7 Pledge of Common Stock by Genesis. Notwithstanding any of the
provisions of this Agreement to the contrary, nothing in this Agreement shall
restrict or prohibit Genesis, or any Affiliate of Genesis acquiring Common Stock
as herein permitted, (1) from pledging all of its Common Stock to secure any
indebtedness of Genesis or any such Affiliate, or (2) from transferring any such
Common Stock to any such pledgee or any assignee of such pledgee as a result of
such pledge (a "Pledge Transferee"); but each Pledge Transferee (i) shall be
bound by the terms, and shall be entitled to the benefits, of this Agreement to
the same extent as Genesis, (ii) except as hereinafter provided, shall be bound
by the terms and shall be entitled to the benefit of subsections (a) through (d)
and the first sentence of subsection (e) of subsection 6.9 of the Put/Call
Agreement and Section 8.9 of the Put/Call Agreement other than subsection (a) or
the last sentence of subsection (g) of such Section 8.9 to the same extent as
Genesis, and (iii) except as specifically provided in clause (ii) shall have no
obligation or liability with respect to the obligations of Genesis under the
Put/Call Agreement. In connection with the assumption of obligations of Genesis
under the Put/Call Agreement as provided in clause (ii) of the preceding
sentence: (A) each Pledge Transferee shall be bound by the drag-along provisions
of subsections (c) and (d) of Section 8.9 of the Put/Call Agreement, including
such provisions as incorporated by reference in Section 6.9(d) of the Put/Call
Agreement, only if (x) the Board of Directors of Corporation receives a fairness
opinion by a nationally recognized investment banking firm selected by
Corporation stating that the transaction giving rise to such drag-along rights
is fair to the stockholders of Corporation and (y) the consideration to be
received by the Pledge Transferee is paid in cash; (B) each Pledge Transferee
shall be entitled to the tag-along rights granted in favor of Nazem in Section
6.9(d) of the Put/Call Agreement, but only in respect of any sale of Common
Stock solely for cash; and (C) no Pledge
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Transferee shall have any right of first offer pursuant to Section 6.9 of the
Put/Call Agreement. In connection with any sale of Common Stock to a Third
Party, no Pledge Transferee shall be required to make any representations or
warranties to the Third Party other than customary and reasonable
representations and warranties as to (i) its ownership of Common Stock, (ii) its
authority to transfer such Common Stock, (iii) the absence of conflicts arising
under such Pledge Transferee's constituent documents as a result of such
transfer of Common Stock, (iv) the absence of liens on such Common Stock created
by such Pledge Transferee, and (v) the absence of any requirement on the part of
such Pledge Transferee to obtain any third party consents (other than those
which have been obtained) in connection with such transfer.
ARTICLE IV
SUPERMAJORITY PROVISIONS
The Corporation shall not take any of the following actions without first
obtaining the approval of at least one designee of each of Cypress, TPG and
Genesis to the Board of Directors; provided that such necessary approval shall
not relieve any such director from his or her fiduciary duties to Corporation or
Corporation's Stockholders.
Section 4.1 Sale of Stock. Corporation shall not sell or issue any Stock
except as provided in Section 5.1.
Section 4.2 Mergers; Dissolution. Corporation shall not merge, consolidate
or divide or otherwise combine with or into any other Person, commence a
dissolution or liquidation or commence any bankruptcy, insolvency, or other
similar proceeding.
Section 4.3 Acquisitions; Creation of Subsidiaries. Neither Corporation
nor any of its Subsidiaries shall acquire any or all of the stock, securities or
other Property of any Person in any transaction, other than (i) immaterial
acquisitions in the ordinary course of business consistent with past practice
and (ii) acquisitions of any management or consulting businesses or operations
as contemplated by Section 3.2 of the Management Agreement.
Section 4.4 Transactions With Affiliates or Subsidiaries. Except as
permitted in the Management Agreement or the Senior Loan, neither Corporation
nor any of its Subsidiaries shall enter into any transaction of any kind or
nature with any Affiliate, including, without limitation, the purchase, sale or
exchange of Property, or the loaning or giving of funds to any Affiliate.
Section 4.5 Dividends and Redemptions. Corporation shall not, nor shall it
cause or permit any of its Subsidiaries to, directly or indirectly: (a) declare,
pay, authorize or make any form of dividend or distribution on or with respect
to its capital stock or return any capital, in cash or Property, to its
stockholders, their successors or assigns (except dividends payable to
Corporation by any of its Subsidiaries), (b) redeem, retire, purchase or
otherwise acquire or retire, for any consideration, any of the capital stock of
Corporation or any of its Subsidiaries now or hereafter outstanding or (c) set
aside any funds for any of the purposes set forth in clauses (a) or (b) hereof.
Section 4.6 Loans and Investments. Neither Corporation nor any of its
Subsidiaries shall make or have outstanding Investments in any Person, other
than (i) Investments of Multicare
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and its subsidiaries existing on the Closing Date (ii) Investments permitted
under the Senior Loan and Subordinated Notes and (iii) acquisitions of any
management or consulting businesses or operations as contemplated by Section 3.2
of the Management Agreement.
Section 4.7 Certificate of Incorporation, Bylaws, Stock Agreements.
Neither Corporation nor any of its Subsidiaries shall amend, modify, supplement
or otherwise change the terms of its certificate of incorporation or bylaws or
any agreement entered into by Corporation or any Subsidiary with respect to its
capital stock or other equity interests.
Section 4.8 Material Agreements. Neither Corporation nor any of its
Subsidiaries shall amend, modify, supplement or otherwise change, or waive
compliance with or consent to a departure from, any of the terms or provisions
of the Senior Loan, the Indenture relating to the Subordinated Notes or any
other Indebtedness of Corporation or such Subsidiaries or any other material
agreement of Corporation or such Subsidiaries except for the termination of the
Management Agreement in accordance with its terms.
Section 4.9 Business Conducted. Neither Corporation nor any of its
Subsidiaries shall engage, directly or indirectly, in any line of business
substantially different from the business con ducted by it or them immediately
prior to the Closing Date, or engage in business or lines of business which are
not reasonably and substantially related thereto.
Section 4.10 Indebtedness. Neither Corporation nor any of its Subsidiaries
shall make any prepayments of any nature whatsoever (or deposit money or other
property for the purpose thereof) on any existing or future long-term
Indebtedness to any Person, except payment on the Senior Loan. Neither
Corporation nor any of its Subsidiaries shall incur any Indebtedness for
borrowed money provided that nothing hereunder will prevent the Corporation from
drawing on lines of credit, revolving credit facilities or other unfunded
portions of Indebtedness approved in accordance with the provisions of this
Agreement and the Management Agreement, including, without limitation, the
Senior Loan.
Section 4.11 Restrictions on Fundamental Changes; Asset Sales. Corporation
shall not, nor shall it cause or permit any of its Subsidiaries to, (a) alter
its or their, as the case may be, corporate, partnership, capital or legal
structure or (b) make or effect any Asset Sale.
Section 4.12 Capital Stock of Subsidiaries. Corporation shall not permit
any of its direct or indirect subsidiaries directly or indirectly to issue any
shares of capital stock to any Person other than Corporation.
Section 4.13 Subordinated Notes and Senior Loan. Corporation shall not,
nor shall it permit any of its Subsidiaries to, take any action or fail to take
any action which constitutes a default under the Subordinated Notes, the Senior
Loan or any other material Indebtedness of Corporation or any of its
Subsidiaries.
Section 4.14 Contracts. Neither Corporation nor any of its Subsidiaries
shall become or be a party to any contract or agreement which materially impairs
such party's ability to perform
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under or comply with this Agreement, or under any other instrument, agreement or
document to which Corporation or such Subsidiary is a party or by which it is or
may be bound.
Section 4.15 Accounting Policies. Corporation shall not change any
accounting policies (including, without limitation, policies relating to the
maintenance of reserve accounts).
ARTICLE V
OTHER ARRANGEMENTS
Section 5.1 Additional Capital for Cure Event Purposes.
(a) If an additional capital contribution by Corporation to
Acquisition Corp. (or, following the Merger, Multicare) is necessary to either
cure or prevent an event of default under, or breach of any financial covenant
contained in, the Senior Loan or the Subordinated Notes or any other material
Indebtedness of Corporation or any of its Subsidiaries, Corporation, by action
of a majority of the Board of Directors, may sell additional shares of capital
stock of Corporation (with such rights and privileges as the Board of Directors
shall determine) (the "Additional Capital") to provide funds to enable
Corporation to make a capital contribution to Acquisition Corp. (or, following
the Merger, Multicare) to cure such default or breach.
(b) In the event the sale of Additional Capital is approved pursuant
to subparagraph (a) of this Section 5.1, each Stockholder agrees to vote the
shares of Stock of Corporation held by each of them to authorize the filing of
an amendment to Corporation's Articles of Incorporation and to take all such
other actions required in order to authorize and consummate the issuance of
additional shares of capital stock of the Corporation in connection with such
Additional Capital.
Section 5.2 Pre-emptive Rights.
(a) Each Initial Stockholder shall have a pro rata right, based upon
the number of shares of capital stock of Corporation held by them, to
participate in purchases of shares of capital stock sold by Corporation.
Corporation shall give each Initial Stockholder written notice (the "Additional
Capital Notice") to such effect which notice shall contain the terms and
preferences of any shares of capital stock and the terms upon which such shares
are being offered, and each Initial Stockholder shall have the right,
exercisable by written notice to Corporation within ten business days from
receipt of the Additional Capital Notice to purchase such shares. If such
Initial Shareholder elects not to make such a contribution, it shall give
Corporation written notice to such effect and Corporation shall have the right
to sell such Additional Capital, on the terms described in the Additional
Capital Notice, to third parties (provided that such third parties agree in
writing to assume performance of and to be bound by the terms and conditions of
this Agreement as a Stockholder hereunder) or other Initial Stockholders.
(b) Each Initial Stockholder electing to purchase additional shares
pursuant to paragraph (a) of this Section 5.2 shall purchase such shares
simultaneously with the purchase by the
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other parties electing to purchase such shares and in any event not earlier than
twenty business days from the date the Additional Capital Notice was given (the
"Additional Capital Closing Date").
Section 5.3 Irrevocable Proxy. Nazem hereby agrees to cause its Affiliate
owning Common Stock to grant to Cypress and TPG an irrevocable proxy and power
of attorney substantially in the form of Exhibit A attached hereto.
Section 5.4 Access to Information. Each Stockholder agrees to cause
Corporation to make available to each of the Initial Stockholders and their
representatives full access to the books and records of Corporation and its
subsidiaries and to instruct all outside auditors engaged by Corporation to make
their work papers available to each of the Initial Stockholders and their
representatives.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Legend. Each certificate representing shares of Common Stock
now held or hereafter acquired shall bear the following legend (until such time
as subsequent transfers thereof are no longer restricted in accordance with the
Securities Act or this Agreement):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT (THE "STOCKHOLDERS AGREEMENT") AND PUT/CALL
AGREEMENT ("PUT/CALL AGREEMENT") BOTH DATED AS OF OCTOBER 9, 1997, AMONG,
INTER ALIA, GENESIS ELDERCARE CORP. (THE "COMPANY"), THE CYPRESS GROUP
L.L.C., TPG PARTNERS II, L.P., NAZEM, INC. AND GENESIS HEALTH VENTURES,
INC. A COPY OF THE SHAREHOLDERS AGREEMENT AND PUT/CALL AGREEMENT ARE ON
FILE WITH THE SECRETARY OF THE COMPANY.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE GIVEN, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF
UNLESS SUCH GIFT, SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDERS
AGREEMENT AND THE PUT/CALL AGREEMENT,
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE, AND NO SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT AND IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH AN OPINION OF
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COUNSEL WHICH SHALL BE REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT SUCH SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS NOT IN VIOLATION OF THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
Section 6.2 Notices. Notices hereunder shall be given only by personal
delivery, registered or certified mail, return receipt requested, overnight
courier service, or by telecopy (and subsequently confirmed by any other
permitted means hereunder) and shall be deemed transmitted when personally
delivered or deposited in the mail or delivered to a courier service or sent by
telecopy (as the case may be), postage or charges prepaid, and addressed to the
particular party to whom the notice is to be sent as follows:
(a) in the case of Corporation:
Genesis ElderCare Corp.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, XX 00000
Telecopier No.: 000-000-0000
Attention: Xxx X. Xxxxxxxxx, Esquire
with a copy to:
Blank Rome Xxxxxxx & XxXxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esquire
(b) in the case of Cypress:
The Cypress Group L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esquire
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(c) in the case of TPG:
TPG Partners II, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxx, Esquire
(d) in the case of Genesis:
Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, XX 00000
Telecopier No.: 000-000-0000
Attention: Xxx X. Xxxxxxxxx, Esquire
with a copy to:
Blank Rome Xxxxxxx & XxXxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esquire
(e) in the case of Nazem:
Nazem, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxx
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with a copy to:
Bartoma Corporation, X.X.
Xxxxxxxxx 00
Xxxxx 00
Xxxxxxx, Xxxxxxxxxxx Antilles
Telecopier: 0000-000-00-00
Attention: Xxxxxxx Xxxxxxx
or to such address as a party may instruct by notice hereunder.
Section 6.3 Severability. In the event any provision hereof is held void
or unenforceable by any court, then such provision shall be severable and shall
not affect the remaining provisions hereof.
Section 6.4 Entire Agreement. This Agreement, together with the other
agreements referred to herein, is the entire Agreement among the parties, and,
when executed by the parties hereto, supersedes all prior agreements and
communications, either verbal or in writing between the parties hereto with
respect to the subject matter contained herein.
Section 6.5 Amendment and Waiver. This Agreement may not be amended,
modified or supplemented unless consented to in writing by Cypress, TPG and
Genesis. Any failure by a party hereto to comply with any obligation, agreement
or condition herein may be expressly waived in writing by each of Cypress, TPG
and Genesis, but such waiver or failure to insist upon strict compliance with
such obligation, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any such subsequent or other failure.
Section 6.6 Consent to Specific Performance. The parties hereto declare
that it is impossible to measure in money the damages which would accrue to a
party by reason of failure to perform any of the obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the other party has an adequate
remedy at law.
Section 6.7 Assignment; Responsibility for Affiliates. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors. No party may assign to any Person any of
its rights hereunder except in connection with Transfers of Stock permitted by
Sections 3.6 or 3.7. Each of Cypress, TPG, Genesis and Nazem shall cause their
Affiliates who are Stockholders to execute a joinder to, and comply with, the
provisions of, this Agreement and shall be liable for any breach of the
provisions of this Agreement by any of their respective Affiliates who are
Stockholders.
Section 6.8 Variations in Pronouns. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the antecedent person or persons or entity or
entities may require.
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Section 6.9 Term. This Agreement shall terminate upon the earlier to occur
of (i) consummation of the exercise of the Put Option or the Call Option
pursuant to the Put/Call Agreement, without any default in connection therewith,
or (ii) at TPG's and Cypress's option, acting jointly, upon (a) failure by
Genesis to comply with its obligations under the Put Option, (b) the occurrence
of any Event of Acceleration (as defined in the Put/Call Agreement) occurring
prior to the second day after the sixth anniversary of the Closing date (as
defined on the Put/Call Agreement) or (c) any sale of Common Stock pursuant to
Section 6.9 under the Put/Call Agreement. The transfer restrictions contained in
Article III shall not apply to Nazem or its Affiliate owning Common Stock
following the sale by Cypress, TPG and their Affiliates of all of the Common
Stock owned by them pursuant to Section 6.9. Following any termination of this
Agreement pursuant to clause (ii), (a) Genesis and/or, to the extent applicable,
Affiliates of Genesis who are Stockholders and Affiliates of Nazem who are
Stockholders shall continue to be subject to the provisions contained in Article
III, and (b) for such purposes, "Initial Stockholders" and "Non-Selling Initial
Stockholders" as used in Article III shall be deemed to refer to Cypress and TPG
and/or to the extent applicable, their Affiliates owning Common Stock; provided,
that the restrictions set forth in this sentence shall apply to Genesis and
Affiliates of Nazem only while Cypress, TPG or their Affiliates own Common
Stock.
Section 6.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 6.11 Further Assurances. Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
Section 6.12 Headings. The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the interpretation
of this Agreement.
Section 6.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
GENESIS ELDERCARE CORP.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
THE CYPRESS GROUP L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
TPG PARTNERS II, L.P.
BY: TPG GenPar II, L.P.
BY: TPG ADVISORS II, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
GENESIS HEALTH VENTURES, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------------
NAZEM, INC.
By: /s/ Xxxx Xxxxx
-----------------------------------
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The foregoing provisions of this Agreement applicable to Affiliates of
Stockholders owning Common Stock shall be binding upon and inure to the benefit
of the undersigned.
Affiliates of The Cypress Group L.L.C.
CYPRESS MERCHANT BANKING
PARTNERS, L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice Chairman
CYPRESS OFFSHORE PARTNERS, L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice Chairman
Affiliates of TPG PARTNERS II, L.P.
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
[Signatures continued on following page]
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TPG MC COINVESTMENT, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
Affiliate of Nazem
GENESIS ELDERCARE PORTFOLIO K. LP
By: Healthworth Associates I, L.L.C.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
Title: Managing Member
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